Browse by: "2015"

This survey highlights the key results of the empirical literature concerning the costs of flexibility enhancing reforms in product and labour markets. The documented costs include reduced employment, loss of government revenue, undesirable distributional consequences and political instability. The literature suggests that: i) once implemented, product and labour market reforms affect prices and quantities quite rapidly; ii) there are no major differences between the overall effects in the short and long run; iii) the costs of reforms are very much related to interactions with other policies and institutions; and iv) the costs of reforms change over the business cycle.

Le niveau de formation des parents continue d’influer sensiblement sur celui de leurs enfants : un individu est ainsi 4.5 fois plus susceptible de suivre des études supérieures si l’un de ses parents est diplômé de l’enseignement supérieur que si ses deux parents ont un niveau de formation inférieur au deuxième cycle du secondaire. Les inégalités observées dans l’enseignement supérieur reflètent dans une large mesure les étapes antérieures de la scolarité. Dans le deuxième cycle du secondaire, les élèves issus de milieu défavorisés sont ainsi moins susceptibles de bien réussir aux évaluations PISA, de terminer avec succès ce cycle d’enseignement et même d’aspirer à suivre des études supérieures. Néanmoins, les établissements d’enseignement supérieur peuvent encore jouer un rôle important dans la réduction des inégalités. En plus de rendre l’enseignement supérieur plus accessible aux étudiants issus de milieux défavorisés, les politiques doivent les soutenir et améliorer leur réussite à ce niveau d’enseignement.

The water in the General Agreement on Trade in Services (GATS) refers to the difference between the bound level of trade restrictiveness permitted by the GATS and the actual trade regime. Using the OECD Services Trade Restrictiveness Index (STRI), this report provides estimates of the water in 15 service sectors for 40 countries. The level of water in GATS commitments varies across sectors. It is highest in sectors where most countries have no commitments (unbound), such as audio-visual services or transport services, as well as sectors where countries tend to make commitments only for selected types of activities, such as legal services. The lowest level of water is observed in sectors such as telecoms, construction, computer and distribution services that are also characterised by a more liberal trade regime. Generally speaking, current services trade policies are much more open than what countries have committed in the GATS and sectors that are “unbound” can be fairly open.

Parents’ level of education still greatly influences that of their children: individuals are 4.5 times more likely to attend higher education if one of their parents has a higher education degree than if both their parents have below upper secondary education. Inequalities in higher education reflect to a great extent what happened earlier in an educational career. Upper secondary students from disadvantaged backgrounds are less likely to perform well in PISA assessments, less likely to complete upper secondary education and less likely even to aspire to attend higher education. Nevertheless, higher education institutions still have an important role to play in reducing inequalities. Policies must aim to make higher education more accessible for students from disadvantaged backgrounds as well as to support these students and improve their success at this level.

The Port of Koper is the single national port of Slovenia and has been growing fast in recent years. It is expected that the existing rail link to and from the port will reach capacity in a few years. A new additional track, involving a tunnel on a separate alignment, has been proposed as a solution. The ITF was asked to perform a broad risk analysis of the project and investigate options for the delivery of the project through a PPP. Within this broad scope the ITF addressed several questions: would the potential for growing traffic at the port justify added capacity; what are the options for increasing capacity on the existing track to buy time; is the cost of the new rail link adequately estimated; what would be the best way to enable private participation in the project?

The recent surge in competition between state and private firms in global markets calls for a reflection on how to minimise any potentially distortionary effects on international trade and investment created by state enterprises while at the same time restraining any undue protectionist policy responses directed at them. This paper provides an assessment of the extent and nature of existing and potential problems as well as a stocktaking of regulatory approaches that can be used to alleviate them. The new empirical evidence on the extent and nature of existing problems presented in this paper comes from the OECD Business Survey on State Influence on Competition in International Markets conducted on 157 firms in 2014. The characterisation of the regulatory landscape draws on the information contained in the OECD Database on National Practices and Regulations with Respect to State Enterprises which comprises 41 indicators covering relevant practices and regulations across 43 countries. In conclusion, cross-border effects of state enterprises remain an important policy issue but views on how to obtain a more level international playing field differ across countries. Further consideration of the definition of entities which should be the focus of guidance of potential international disciplines would be an important area for future exploration and, crucially, would require greater transparency both from the governments and the entities under their influence. These discussions should not be limited only to state-owned entities, but should be extended to a broader spectrum of state firms. In the meantime, it is important that governments neither use state enterprises to influence competition in international markets, nor unduly discriminate against foreign state enterprises that trade and invest according to market principles.

Concessions are contracts where the consideration for the works or services to be carried out consists either solely in the right to exploit the work or service, or in this right together with payment. The acronym PPP refers to Public-Private Partnership. PPPs tend to be complex and long term contracts. The award of works concessions is subject to the rules of the public procurement Directive, while the award of services concessions with a cross-border interest is subject to the principles of the Treaty on the Functioning of the European Union. However, the concept of works and services concessions is a concept of EU law and must be interpreted in line with it. SIGMA Brief 18 offers guidance on current EU rules on concessions and PPPs.

Lake Taupo is New Zealand’s largest lake, and a national icon. Its pristine waters attract visitors from round the world for a multitude of water-based recreation and sight-seeing activities. It is also important to New Zealand’s indigenous peoples. In the late 1990s, scientific investigations by Environment Waikato (now the Waikato Regional Council), the regional authority responsible for environmental management in the Lake Taupo catchment, revealed that water quality in Lake Taupo was gradually declining. The research identified that nitrogen emissions were entering the lake from both natural processes and human activities, such as pastoral farming, urban runoff and wastewater (see Table 1). The total amount of nitrogen entering the lake was estimated at 1 360 tonnes annually. Of the 556 tonnes of manageable (i.e. human-induced) emissions, 510 tonnes were from pastoral farming. Lake Taupo is contained within a collapsed caldera formed from one of the world’s largest eruptions, which took place 26 000 years ago. The now dormant volcano has left a legacy of ejected pumice and ash over much of New Zealand’s North Island and in particular in the catchment of the lake. This underlying layer of pumice makes the soil structure in the lake’s catchment extremely permeable and allows the unrestricted movement of both water and contaminants into the water tables draining into the lake. Reducing contaminant inflows into the lake therefore needs to address the challenging issue of diffuse groundwater movements, which are largely unseen, and difficult to measure and predict. In some parts of the catchment, it can take more than 100 years for run-off nitrogen to reach the lake (Vant, 2008).

Long-term savings and investments (LTSI) by individuals enhances their financial security while also supporting growth and financial development. Evidence shows that financial knowledge and skills are positively related to LTSI behaviour, and indicates a strong correlation between levels of financial literacy and retirement wealth accumulation. However, both the quantity and quality of LTSI are often worryingly low, pointing to an important role for financial education to increase levels of financial literacy and thus improve LTSI among individuals. Evaluations of various types of financial education aimed at increasing LTSI have identified some promising results. Initial findings suggest the need for additional, targeted evaluation of education programmes to compare the effects of different delivery channels and the intensity of provision in order to identify optimal approaches. More detailed research is also important to fully understand why some evaluations indicate mixed outcomes from certain programmes.

Business cycle indicators are important instruments for monitoring economic development. When employing indicators one usually relies on a sound statistical database. This paper deals with indicator development in a scarce data situation. Indicator building is merged with temporal disaggregation, which is often used by statistical offices. The discussed tools are applied in a case study for Abu Dhabi. Because the economy of Abu Dhabi is very dependent on oil, real income reflects the economic situation better than real gross domestic product (GDP). For this reason a measure of real gross domestic income (GDI) was chosen as reference series.

Keywords: Business cycle indicators, temporal disaggregation, terms of trade, oilproducing countries
JEL code: E01, E32, C22

How often should we update predictions for economic activity? Gross domestic product is a quarterly variable disseminated usually a couple of months after the end of the quarter, but many other macroeconomic indicators are released with a higher frequency, and financial markets react very strongly to them. However, most of the professional forecasters, including the IMF, the OECD, and most central banks, tend to update their forecasts of economic activity only two to four times a year. The Central Bank of Brazil, not only disseminates its official forecasts every quarter as other central banks, but also collects and publishes the results of professional forecasters’ survey data at a daily frequency. The aim of this article is to evaluate the forecasting performance of the Central Bank of Brazil Survey and to compare it with the mechanical forecasts based on state-of-the-art nowcasting techniques. Results indicate that both model and market participant predictions are well behaved, i.e. as more information becomes available their accuracy and correlation with the actual realization increases. In terms of performance the model seems to be slightly better than the institutional forecasts in the nowcast and backcast.

Keywords: Nowcasting, Updating, Dynamic Factor Model.
JEL classification: C33, C53, E37.

Twenty-one individual country business cycle chronologies, maintained and updated by the Economic Cycle Research Institute (ECRI), are analysed for their degree of synchronisation with a proposed “world business cycle chronology”. Several key results emerge. First, perhaps not surprisingly, the world’s four 20th Century locomotor economies of the US, UK, Germany and Japan are statistically significantly and reasonably strongly positively synchronised with the world cycle. Second, European countries in the sample are either positively synchronised with the world cycle at zero lag or with a lag of around three months. Third, the NAFTA countries (US, Canada and Mexico) are, perhaps again not unexpectedly, quite strongly positively synchronised with the world cycle at zero lag and with each other. Fourth, the single South American country included in the sample, Brazil, is strongly positively synchronised with the world cycle at zero lag as well as with the NAFTA countries – but behaves very differently from China and India with respect to the world cycle. Fifth, interestingly, the newly industrialized East Asian countries included in the sample appear to lead the world cycle by about three to nine months. Finally, and very interestingly, there appears to be some a priori evidence of a long leading negative synchronisation between the commodity exporting countries in the sample and the world cycle.

Key words: world business cycle, synchronisation
JEL classification: E32, E37

Cost-benefit analyses and other quantitative appraisals are used in many countries to support decision-making in different areas of public policy, including many investment projects in sectors such as transport and energy. These decisions can have significant effects – either negative or positive – on future emissions of carbon dioxide and other greenhouse gases and it is important whether, and how, countries incorporate estimates of the marginal value of changes in carbon dioxide emissions into these analyses. This paper discusses the range of approaches which can be employed to value changes in carbon emissions in policy appraisals, setting out the key issues in the choice of valuation principles, and presents some case studies and a survey of current practice in OECD countries.

The top-performing country in the PISA assessment of digital reading was Singapore, followed by Korea, Hong Kong-China, Japan, Canada and Shanghai-China. Students in Australia, Canada, Ireland, Korea, Singapore and the United States show the most advanced web-browsing skills. More often than students elsewhere, they carefully select links to follow before clicking on them, and follow relevant links for as long as is needed to answer a question. There is a strong association between countries’ digital reading performance and the quality of students’ navigation across digital texts.

Singapour arrive en tête du classement à l’évaluation PISA de la compréhension de l’écrit électronique, suivi de la Corée, de Hong-Kong (Chine), du Japon, du Canada et de Shanghai (Chine). Les élèves d’Australie, du Canada, de Corée, des États-Unis, d’Irlande et de Singapour présentent le niveau le plus avancé de compétences en navigation web. Plus souvent que les élèves d’autres pays, ils sélectionnent soigneusement les liens à suivre avant de les ouvrir et suivent les liens pertinents aussi longtemps que la résolution du problème le nécessite. Il existe une forte corrélation entre la performance des pays en compréhension de l’écrit électronique et la qualité de la navigation des élèves sur texte électronique.

The problems caused by state and local revenue volatility are inherently challenging. Oregon has an especially volatile revenue structure, which can cause all sorts of problems as the state moves through the business cycle. Nevertheless, we have concluded that these problems are caused less by revenue volatility per se than by adjusting spending up and down to match current revenue flows, from growing spending at unsustainable rates during booms and cutting back precipitously during busts. The mild recession of 2001-02 had a particularly severe aftermath in Oregon. This event shocked the state’s policy makers into addressing the revenue volatility issue, making sense of it, and taking steps that greatly mitigated the adverse effects of the “Great Recession”. This article describes three things: the public-policy processes that produced this moderately happy outcome, my own voyage of discovery as I observed/participated in these processes, and a set of practical mechanisms states can use to stabilise spending.

JEL classification: H11, H20, H70
Keywords: Oregon, Great Recession, cash flows, income taxes, revenue volatility

This paper tries to shed light on the Korean performance budgeting (PB) system by analysing its strength and limitations by utilising the framework of the OECD 2011 PB survey. It provides an overview of the Korean PB system and describes the Korean system based on the OECD survey results. Lastly, current issues of the Korean PB system are discussed including its future directions.

JEL classification: H61, H830
Keywords: Performance budgeting, performance information, budgeting, Korea

OECD’s Recommendation of the Council on Budgetary Governance makes a substantial contribution to discussion of good budgetary practice by synthesising much common understanding while updating it to recognise some lessons from the experience of the Great Recession. Yet its implicit understanding of the purposes of budget processes has weaknesses both as policy and political analysis. The policy understanding overemphasises the importance of budget totals relative to budget details. The political understanding is as top-down as the policy view. Although budgets might be seen as contracts between citizens and the state, in a representative system they are better seen as treaties among citizens negotiated through politics. The Recommendation barely recognizes the existence of and challenges from political conflict.

JEL classification: H00, H60, H61
Keywords: Balance, fiscal policy, information, representation, top-down, United States